Case study 12.1 Profitel Inc.

Virgilio Crespo (Rick)

Problem Analysis: 1) The performance developed by Profitel has declined significantly, and the profits have produced the same effect after Lars Peeters was named as a new chief executive. Throughout this process was perceived his aggressive way and particular style of leadership used into the company. All these kind of actions accompanied by a representation of an arrogant image, which was recognized by customers and the leaders of the governments as well. 2) A contract valued by $1 billion granted to a foreign ownership competitor rather than Profitel. 3) Members of the board worried by betting at unreliable and wrong technology. 4) The reduction of the labor force by 5 percent takes a place into the problem analysis included with two more factors: layoffs influenced into the morale producing decay into the employees, and the share price declined 20 percent.

Decision maker: Members of the board have to decide how to prevent such occurrences later in the future.

Problem Statement:

Some status and field knowledge could create an idea about Lars Peeters, who was considered as a good choice for the company. Peeters experimented different actions with the time, which indicated deficiency into the leader role letting see lack of leadership effectiveness, and absence of motivation for the employees. On the other hand, Peeters lacked of charisma and supporting leadership behaviour, which did not produce a balance on the directive in terms of perspective behaviour explaining the cause of his failure. The emotional intelligence, leader motivation, the sum of contingencies into the leadership produced the loss of practical intelligence shown by the government contract, and the morale for the workers. Peeters affected socially and culturally his

values, because he never took a time to combine the workers with his plans receiving different naggings from the company being seen such as arrogant person.

Alternatives: 1) Study the possibility to hire a new person with transactional leader qualities. If this alternative is implemented the possible Pros originated could be: Company will present fewer costs and expenditures. Company will present less resource. Approach the problem in another situation.

If this alternative is implemented the possible Cons originated could be: Persistence of being at the same situation. Rumors could be present into the workplace. Moral employee will continue decreased.

2) Study the possibility of rehiring Lars Petters again. If this alternative is implemented the possible Pros originated could be: Company will present new terms for the plan in order to let it work much better. Approach the problem in another situation.

If this alternative is implemented the possible Cons originated could be: Persistence of being at the same situation. Rumors could be present into the workplace. Moral employee will continue decreased.

3) Study the possibility to hire a new person with better presence, irrefutable leadership qualities and transformational leader style. If this alternative is implemented the possible Pros originated could be: A better process for the employees motivation. Approach the problem in another situation. Due to the innovation the company could take a new vision.

If this alternative is implemented the possible Cons originated could be: The company will take risk due to the innovation. If the company approaches the problem in another situation, it will involve more cost and expenditures. The company should start all the process again.

Additional Alternatives:

Create a special set of norms for employees in leading positions creating a Person-job matching. Decrease power discretion of employees in leading positions Try to implement self-directed teams instead of leaders introducing performancebased rewards as a leadership substitute. Choose the trusted employees who perform the best and promote them to the leading positions in order to make a continuously monitor employees in leading positions for errors.

Criteria: Low level of unintended consequences Guarantee that employees in leading positions will behave ethically Lower need for a single leader The board has more control over current situation Improved company's image (both among government officers and customers) and employees well- being in order to increase in profits offering better qualities of decisions.

Decision: In order to establish the possibility to experiment new improvements and changes into the Profitel organization, the best choice to consider is the fact of hiring another person with transformational leader qualities. In this manner, the company could find its purpose easily because a huge part of the mistakes, and damages in general originated could be recovered elevating the status to a new vision taking a place with the employees morale. According with this decision, the goals of innovations predicted could be reached.

Implementation: For a successful it is necessary the supervision of the new leader. This means the new leader should be monitored by the board members doing a very clear study about the perspective of the new leader, taking into account the vision, process, inspection, backgrounds. In this manner, employees could get more motivation driving the situation toward the CEO to reestablish, and recover the morale lost with the time.

Lessons learned: Mr. Peeters was obviously short of integrity, cognitive and emotional intelligence, and knowledge of business; when he decided to pick the technology of inferior quality and promoted it to the customers, which resulted in the profits decline. If the board had been continuously monitoring Mr. Peeters for errors, they would be aware of the consequences immediately, after hiring him. This would guarantee the ethical behaviour of person in leader's position; consequently, by exercising more control over situation, the board will be able to improve company's image and raise the profits. After hiring two people from previous workplace, the rest of company's workforce was cut by 5%, which clearly indicates that Mr. Peeters was not a relationship-oriented leader. However, workplace environment affects substantially other job components. Leadership is a pretty clear role developed into the business due to the importance in its process. A leader is a person with a huge potential to increase or decrease the perspective of a company and drive it toward a disaster or increase the organization according to the vision, effectiveness understanding the relation between a company and a leader, which is driven by the interdependency.